The World Bank has, for the first time, launched a bond with returns directly linked to greenhouse gas emission reduction outcomes. It is the $200 million Clean Cooking Outcome Bond, which utilises Internationally Transferred Mitigation Outcomes (ITMOs), units representing verified reductions in emissions that are transferable between countries or jurisdictions under Article 6.2 of the Paris Agreement.

Issued by the International Bank for Reconstruction and Development (IBRD), one of the five institutions that make up the World Bank, and regulated on 12 December 2025, the bond ties part of the investors' return to the generation and sale of ITMOs produced by clean cooking technology deployment projects in Ghana.

The stated goal is to reach 1.3 million people through the distribution of about 400,000 cookstoves, benefiting the environment and improving the quality of life through more sustainable energy solutions. More than two billion people, mostly in sub-Saharan Africa, still depend on wood and charcoal for cooking. A practice that damages health, fuels gender inequalities and contributes to environmental degradation and greenhouse gas emissions. The IEA estimated in 2023 a funding gap of $8 billion per year to achieve universal access to clean cooking by 2030.

What are outcome bonds?

Outcome bonds are an innovative financial tool that ties investors' returns to the achievement of defined social or environmental outcomes. “Unlike traditional ‘use of proceeds’ obligations, outcome bonds incorporate performance risk into the financial structure,” Isabel Reuss, Senior Climate & Social Advisor at the Forum for Sustainable Finance, explains to Renewable Matter. “By doing so, they transfer project risk from donors to investors, while providing capital protection through AAA support from the World Bank, for example. Coupon payments are linked to ‘outcomes’ through indicators such as emission reductions or improvements in biodiversity or health, thereby aligning financial incentives with measurable impact. The Wildlife Conservation Bond (Rhino Bond) and the Amazon Reforestation-Linked Bond are examples of this model, channelling private capital into conservation and climate projects.”

An issue expanding the outcome bond market

The Clean Cooking Outcome Bond was priced on 5 December 2025 and will expire on 31 March 2032. It has attracted over ten investors, some of which are involved in a World Bank outcome bond for the first time, a statement from the organisation reads. Mackenzie Investments, Nuveen, Rathbones, RBC BlueBay Asset Management, Skandia and Velliv, among others, as well as Fidelity, Legal & General and ZepRe took part in the deal. Overall, the six issues of this type launched by the institution so far have involved more than 25 investors, a sign of a steadily expanding base.

Even the broad geographic distribution shows a cross-sectional interest: 46% of participation comes from North America, 40% from Europe, while Africa, Asia and the Pacific account for the remaining 14%. This is particularly significant considering that this transaction also marks the first participation of an African investor in a World Bank outcome bond, ZEP-RE. “Shifting to clean cooking helps safeguard the environment, produces measurable climate benefits, advances Sustainable Development Goals (SDGs), transforms lives by enhancing health, particularly for women. It empowers women, and enables them to gain economic resources, both time and money. We are honoured to contribute to outcomes that strengthen the continent’s resilience,” said Hope Murera, Managing Director & CEO of ZEP-RE (PTA Reinsurance Company).

The connection with carbon markets and Article 6

From a financial point of view, the bond is fully capital protected, i.e., it guarantees full repayment of the $200 million raised, all of which supports the World Bank's global sustainable development activities. The fixed return recognised to investors is lower than that of an ordinary World Bank bond of similar maturity: 1.093% per annum, with a short final coupon.

The part of the yield “renounced” by investors is instead front-loaded: about $30.5 million, which, through a hedging transaction with Standard Chartered Bank, the transaction's book-runner, is immediately allocated to finance the distribution and use of clean cookers in Ghana by the company UpEnergy. In addition to this component, there is a variable return linked to the sale of carbon credits generated by the assets, linked to ITMOs under Article 6.2.

“When tied to carbon credits, outcome bonds integrate climate markets into financial markets,” Reuss continues. “Coupon structures can depend on the issuance of certified carbon units, including ITMOs under Article 6.2 of the Paris Agreement. Ghana's Clean Cooking Outcome Bond enacts this innovation by tying yields to ITMOs generated through the distribution of clean cookstoves, which Switzerland's KliK Foundation withdraws, in line with its national climate targets.”

In this scheme, ITMOs generated in Ghana are transferred and counted by Switzerland towards its climate targets, while Ghana records the corresponding “adjustments” in its NDCs, in accordance with the rules of Article 6.2. This way, outcome bonds mobilise private capital for climate action and at the same time operationalise Article 6.2, creating a bridge between sovereign climate commitments and investor-driven finance.

Future prospects: “Impact-related finance prototypes”

Alignment with Article 6.2, however, remains technically challenging. “Countries are required to disentangle complex authorisation procedures, registration systems and compliance rules, which can discourage participation and limit scalability,” Reuss explains. “Investors face inconsistent accounting risks and potential integrity issues, which demand robust verification frameworks to ensure credibility.”

Challenges that underline the importance of harmonised standards and transparent governance for outcome bonds to expand beyond their current niche in the sustainable bond market, Reuss concludes. “Despite accounting for a small proportion of global issuance, these bonds are increasingly seen as prototypes of impact-linked finance, capable of tying investor returns to tangible results on climate and biodiversity, testing the operational feasibility of Article 6.2. of the Paris Agreement.”

Cover: photo Envato